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The economic and financial crisis in Europe: addressing the causes and the repercussions


  • Watt, Andrew


The article analyses the situation facing the European economy and traces both the more fundamental and the proximate causes of the worsening crisis. It argues that European policymakers have the tools at their disposal to limit the extent and duration of the recession and proposes a package consisting of five elements: expansionary monetary policy; a coordinated fiscal stimulus; anti-deflationary wage policies; continued efforts to stabilise the financial sector; and ad hoc national measures to break negative feedback loops. Proposals are also developed for more medium-term measures to prevent crises in the future and improve Europe's ability to effectively manage its economy. The article concludes that, given the major question marks as to whether, with the current institutional structures, Europe actually will manage to put in place the required coordinated response, a 1929-scenario, while far from inevitable, remains a possibility.

Suggested Citation

  • Watt, Andrew, 2008. "The economic and financial crisis in Europe: addressing the causes and the repercussions," MPRA Paper 12337, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:12337

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    References listed on IDEAS

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    14. Pradhan, Jaya Prakash & Das, Keshab & Paul, Mahua, 2006. "Export-orientation of Foreign Manufacturing Affiliates in India: Factors, Tendencies and Implications," MPRA Paper 12338, University Library of Munich, Germany.
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    Cited by:

    1. Hyman, R., 2010. "Social dialogue and industrial relations during the economic crisis : innovative practices or business as usual?," ILO Working Papers 994545023402676, International Labour Organization.
    2. Isac BORS, 2011. "The Issue of the Financial Regulations and the Crisis – Romanian Case," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 326-330.
    3. Bostan Ionel, 2014. "Juridical Tools of Governmental Nature Used to Mitigate Various Difficulties of the Financial and Budgetary System," Scientific Annals of Economics and Business, De Gruyter Open, vol. 61(2), pages 133-148, December.
    4. Munteanu, Ionica, 2009. "Criza financiara 2007-2008: cauze si consecinte
      [The financial crisis 2007-2008: causes and consequences]
      ," MPRA Paper 36771, University Library of Munich, Germany.
    5. Costa Cabral, Nazare, 2010. "Breve guia temático e bibliográfico sobre o estudo da actual crise financeira e económica
      [Short thematic guide to the study of current financial and economic crisis]
      ," MPRA Paper 20743, University Library of Munich, Germany.
    6. repec:ilo:ilowps:454502 is not listed on IDEAS

    More about this item


    economic crisis; European policy-making; coordinated fiscal stimulus;

    JEL classification:

    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-

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